Compliance Attorney Barred from Practice Before the Commission

The Commission has long enforced its ethical rules as to the wide variety of professionals who appear and practice before it. While in years past the enforcement of those rules against professionals was controversial, today enforcing ethical rules as to the professionals that appear before the agency is an accepted part of its work. The most recent example of such an action is In the Matter of Ellen McCarthy, Esq., Adm. Proc. File No. 3-21897 (March 21, 2024).

Respondent McCarthy is an attorney admitted to practice in the state of New York in 1989. Her career centered on regulatory and compliance work. Early in her career she focused on regulatory and compliance work for self-regulatory organizations. Later she served as a compliance professional in the private sector. Recently she informed the staff that she is retired.

This matter focuses on an order entered by the Commission in May 2018 directing that Manhattan Transfer Register Company comply with certain undertakings. It directed that the firm retain an independent consultant to prepare a report identifying deficiencies and weaknesses in its policies, procedures and supervisory controls. This included the implementation of those policies and procedures. Manhattan hired an independent consultant or IC who in turn retained Ms. McCarthy.

IC and Ms. McCarthy submitted their independent consultant Report to the Commission on or about September 13, 2018. This completed their engagement. Under the terms of the engagement both IC and Ms. McCarthy were required to remain independent of Manhattan Transfer for two years following the completion of the Report.

By late September 2018, however, Ms. McCarthy disregarded her obligation. Specifically, she continued to perform work for the company. Respondent did request that the Commission permit her to accept the engagement in August 2018, prior to commencing work. She did not wait for a response before commencing work, however. By September 21, 2018, the staff informed Ms. McCarthy that she had to honor her commitment to remain independent. Ms. McCarthy continued with her engagement. She did take steps to conceal her activities after the staff denied her request.

The Division of Enforcement later opened an investigation into the matter. During her testimony Ms. McCarthy made false statements. The Order alleges violations of Rule 102(e)(1)(ii). The proceeding was resolved when the Commission accepted Ms. McCarthy’s settlement offer and entered an order denying her the privilege of appearing or practicing before the Commission.